IMF out with a report on Japan 19 June

  • sees Japan inflation at 0.7%in 2017, 0.6% in 2018
  • BOJ should drop 80trln yen figure in statement on bond buys
  • expects Japan growth of 1.3% in 2017, 0.6% in 2018
  • search for higher yields in Japan brings new and less understood ideas
  • mid-term fiscal plan should place emphasis on gradual sales tax hikes asap to at least 15%
  • risks to Japan economy tilted to down side
  • inflation likely to stay below 2% target over medium term
  • near term fiscal stimulus should be neutral in 2018, avoiding scheduled withdrawal of fiscal stimulus
  • recent changes in mon pol are in right direction
  • not yet time to withdraw fiscal stimulus but that can begin soon
  • govt should encourage pvt sector on wage increases

Cautious note from the IMF

USDJPY 110.92 in retreat again from 111.10. Expect bids/demand into 110.80 initially then larger into 110.50 should the fall continue.

BOJ - Need to continue easy policy says IMF